EnergyNews
from Brussels
Danish Presidency of the EU
Council – Energy Priorities
Latest Developments
On 1st January, Denmark assumed the rotating presidency
of the EU Council of Ministers, taking over from Poland for
a period of six months. As holder of the Council Presidency,
Denmark is responsible for setting the agenda for intergovernmental discussions and leading the negotiations with the
other EU institutions. At the same time, however, its priorities are closely linked to the European Commission work programme for 2012.
While the ongoing Euro-area debt crisis will continue to preoccupy meetings of heads of state and government, at ministerial level the Danish government intends to advance its
agenda of a responsible, dynamic, green and safe Europe.
Indeed, energy issues form a substantial part of the Green
Europe focus area, with many policy proposals which were

Welcome to Hill+Knowlton Strategies’ regular update
on key European regulatory developments that will
directly impact businesses in the energy sector.

Jan - Feb
2012

introduced in 2011 still on the table and at crucial stages in
their negotiation.
First, the proposed new energy efficiency directive, intended to
set a common framework to promote energy efficiency across
the EU, is a major priority, with the Danish Presidency aiming
for an agreement before the end of June. This ambition may be
thwarted by delays in the European Parliament adopting its position due to the vast number of conflicting positions being put
forward by MEPs, while the national delegations in the Council
have proposed limiting the scope of the public building renovation requirement to buildings owned by central governments.
The proposed infrastructure package is the Presidency’s second priority, where it will work for the development of an effective and intelligent transmission network, so as to enable the integration of large-scale renewable energy into the EU’s energy
supply. The proposed new legislation will enable a streamlined
mechanism for identifying cross-border “projects of European
interest”, within a set of strategic corridors and priorities, which
will benefit from a shorter permitting period and streamlined

Energy Roadmap 2050

administrative procedures. Third, negotiations on the proposed
regulation on the safety of offshore oil & gas activities will be a
further focus of the Presidency. As an oil and gas producing nation, Denmark has a clear interest in this proposal, particularly
as it seeks to extend the regulatory approach of the North Sea
nations to all European waters. While it is fairly unlikely that an
agreement be reached before the summer, the Presidency will
work to ensure that discussions get off to a good start and seek
to make its mark building on the expertise which comes from
decades of exploration and production in Danish waters.

Latest Developments
On 15 December 2011, the European Commission adopted
the “Energy Roadmap 2050” Communication which explores
the challenges posed by delivering the EU’s objective of 8095% decarbonisation by 2050, while ensuring at the same time
competitiveness and security of supply. The sectoral roadmap
is one of several that follow the Commission’s all-sector “Low
carbon economy roadmap”, released in March 2011, which
compares a scenario of global action with a unilateral scenario.

All this is set against the backdrop of the debate on deepening the EU’s CO2 emissions reduction targets. Discussions
over a possible move to a 30% target for 2020 (up from 20%,
compared to 1990 levels) were put on ice under Poland’s
presidency, due to that country’s objections to such a move
given its high share of energy-intensive industries and reliance
on coal. While Denmark has traditionally been supportive of
stricter emissions targets, the new Presidency has mollified its
stance in order to garner Polish support for a draft resolution
on the Commission’s recent roadmap to a low-carbon economy in 2050. The text now before national delegations refers
to the fact that if the EU achieves its 20% energy efficiency
objective in 2020, then a 25% emissions cut may be possible,
without referring to this as a target. The Danish presidency
has similarly been careful to ensure that references to deeper
cuts between 2020 and 2050 are portrayed as possible milestones, rather than explicit targets. This debate will also feed
into attempts to find agreement on endorsing the 2050 Energy
Roadmap (see article below).

The analysis set out in the long-awaited Energy roadmap explores five scenarios created by different combinations of the
four main decarbonisation routes - renewables, energy efficiency, nuclear and carbon capture and storage technologies (CCS)
and contrasts these with a ‘business-as-usual’ approach.
In outline, the projections include a scenario in which the EU
improves its energy efficiency, enabling renewables to provide 64% of electricity consumption by 2050, and a ‘high renewables uptake’ scenario where they would provide 97% of
electricity consumption, with nuclear power and coal almost
eliminated from final energy use. A third scenario would see no
energy source preferred, with each competing on a market basis. Decarbonisation would instead be driven by carbon pricing.
The two other scenarios explore a “low-nuclear” scenario
where coal power plants using carbon capture and storage
(CCS) technology make up the difference along with renewables and a scenario with the highest share of nuclear energy at
18%, which would still be a decrease from today’s 20%. Inclusion of a sixth scenario, which combined energy efficiency and
increased use of renewables, was being urged by the Commission’s Climate Action department. This was, however, opposed
by Energy Commissioner Günther Oettinger, on the grounds
that such a scenario can only be considered after Member
State support for the proposed new energy efficiency directive
becomes clear.

Impact & Opportunities
The six-month Presidency term is an important opportunity
for Denmark to present itself as an influential EU Member
State capable of assuming leadership in a new institutional
set-up (since December 2009, the European Council has a
permanent president chairing the meetings of the 27 heads
of state and government, which clearly weakened the role of
the EU Council Presidency). This is especially important given
that Denmark is a small country which remains outside the
Eurozone, and is one of the few EU states to currently have a
left-of-centre government in the current climate of economic
austerity. While the sovereign debt crisis in the Eurozone is
dominating EU strategic decision-making, Denmark will be
keen to push forward on the above energy objectives, not
least because the investments required to deliver energy efficiency improvements and infrastructure connections are seen
as a means to create jobs and growth.

All in all, the roadmap finds that, although the decarbonisation
routes would demand large upfront capital expenditure until
2030, by 2050 investment costs would be roughly the same
owing to increasing fuel costs. Continuing current policies
would bring total energy system cost to 14.6% of European
gross domestic product (GDP) in 2050, roughly the same as
the other scenarios. This compares to the 10.5% of GDP spent
in 2005.

2

Impact & Opportunities

However, according to Mr Oettinger, the final configuration is
likely to be a mix of the projections, following a debate with a
wide range of stakeholders. As a result, he expects to “achieve
clarity with investors” on what future strategies are worth pursuing by 2013 or 2014 at latest. He expressed his wish for the
adoption of a new EU binding renewables target for 2030 by
2014 to give low carbon investors long-term certainty. The roadmap currently suggests a renewables share of about 30%.

The debate over further targets and milestones for the
years to 2050 will be a key element of continued discussions around the Roadmap. An earlier draft said that “further renewables targets for 2030 could be an option since
Europe is currently on the right track to achieve the targets
for 2020”. In the same paragraph, which has since been
scrapped, interim targets on CCS and energy infrastructure were envisaged as a possibility. But the roadmap says
that the modelling for these scenarios is dependent on
a global climate deal, which could be many years away.
The Commission consultation on a post-2020 renewable energy strategy, running from 6 December 2011 until 7 February,
has been an opportunity for stakeholders to voice their views
on whether there is a role for further renewable targets and the
findings will feed into the discussions. The upcoming Communications on CCS (by the summer) and energy technologies
(in Q1 2013) should also be closely monitored.

The roadmap is more careful in its wording and, arguably, less
ambitious in its scope than previous leaked drafts. The final
version stops short of recommending targets, a key source of
controversy, while it recognises that EU Member States and investors need milestones.
While some Commission officials expressed criticism over the
Roadmap’s lack of ambition, Green groups praised the roadmap’s demonstration that a high uptake of renewables would
come at little extra cost compared to a business-as-usual scenario. But they maintain that the Commission has purposefully
underestimated renewables potential.

Industry in general has been strongly pushing the need for regulatory certainty and clarity over whether there will be further
targets, in order to be able to make necessary investments,
a point which is readily accepted by Commissioner Oettinger.
The coming months will therefore offer the opportunity to make
such arguments to policy-makers, and to offer suggestions as
to what the policy framework should look like post-2020.

The Danish Presidency of the EU Council is to prioritise the
reaching of an agreement between Member States on endorsing the Roadmap, although discussions are likely to be
impeded by disagreements between Member States over interim targets to 2050.

3

Nuclear Stress Tests
Latest Developments
The European nuclear ‘stress tests’, examining whether the
143 European nuclear power plants can withstand the effects
of natural disasters, human failures or malevolent acts, are
well on track. The European Commission issued an interim
report on November 24th based on self-assessments from
nuclear plant operators and national progress reports from
national regulation authorities.
As the deadline for the national regulators’ final report was on
the 31st December 2011, the Commission’s November conclusions are only food for thought. Nevertheless, it already highlighted interesting pointers. As such, it seems clear that national
regulators have different approaches to safety and use varying
criteria to define safety improvements. The Commission has
therefore started to review nuclear safety legislation and to envisage ways for improvement in a number of policy areas. The
Communication proposed further action through either stronger Member State cooperation or through full blown EU legislation on nuclear safety. More precisely, it focused on:
• Minimum technical safety requirements: to harmonise disparate national safety margins, EU-level technical criteria
could be commonly agreed for siting, plant design, construction and operation. These criteria should be a reference point when licensing or checking the operations of the
plants.
• Licensing and checks: to ensure the effectiveness of the
system, the decisions of national regulatory authorities
should be open to public scrutiny. This will guarantee that
issuing licences and the control of the operation of existing
ones is done independently.
• Cross-border emergency response: since nuclear safety
is a transborder issue, the scope and reach of emergency
plans should be developed beyond national frontiers. Member States should cooperate more closely, sharing available
healthcare and response equipment such as back-up generators.
• European liability schemes: a wide variety of victim protection schemes among EU Member States implies that in the
case of a radiological disaster, citizens would be compensated based on nationality. As radiological emergencies do

not stop at national borders, a minimum EU-wide standard
should be put in place.
Nuclear security has been dealt with separately under the auspices of the Council of the EU. The specifically created Council
Ad-hoc Group on Nuclear Security also issued a report highlighting that EU Member States would disseminate good practices at the EU level and were ready to making full use of and
strengthen relevant international regimes – this includes the
participation in international peer review missions. It also emphasised the close link between nuclear safety, security and
counterterrorism strategies. Security measures need to be
continuously re-assessed in light of evolving threats.
Looking ahead, peer reviews of the Member States’ final reports on nuclear safety are being carried out until April 2012
to ensure that no important issues have been overlooked and
to provide national regulators with good practices for further
consideration. The Commission will then present a final report
to the European Council for their 28-29 June 2012 meeting, including possible legislative initiatives aiming to further strengthen the nuclear safety framework in Europe. Similarly, the final
results of the work of the Council Ad-hoc Group on Nuclear
Security will be published in its final report by June 2012.

Impact & Opportunities
Following the earthquake and tsunami of the 11th March 2011
that hit the Fukushima-Daiichi nuclear power plant in Japan,
nuclear safety has regained heavy political attention. It has become a very sensitive topic on which it would be unwise to present another picture than one of extensive cooperation. A low
profile and the image of a concerned, transparent but serious
industry that is willing to cooperate should be overall favoured.
At the national level, regulators are considering how to engage
the public by organising a structured and comprehensive information process. At the EU level, a public meeting was held on
January 17 and stakeholders were given the opportunity to submit peer review suggestions until January 20. A further public
meeting will be organised after completion of the final peer review report and, if possible, before the submission of the Commission’s report to the European Council next June. Participation in these meetings and engagement with the national and
European authorities is essential to stay ahead of the game.